Doomed Planet

Going green costs jobs

Mark Lawson

Blowing away money – 4

Wind and alternative energy activists confronted with evidence that clean and green power is little more than a vastly expensive way to not save carbon, may start talking about the jobs to be generated by our adoption of green power in all its forms.

Perhaps it may cost a bit more, the theory goes, but there are loads of jobs in building wind generators and the like, and in exporting green energy equipment and expertise to other countries, so really there will be little or no economic pain. At least that is the theory, and as theory goes it is wilful self delusion.

Wind and alternative energy projects will increase electricity prices. Activists say this increase will be just a few per cent but, as noted in previous articles in this series, there is plenty of evidence from overseas networks and independent reports that power from wind generation may cost several times that of power from fossil fuel, despite wind being free.

A major but not the only problem in trying to reduce costs in wind power is that those who run the energy grids will have no choice but to keep on hand fossil fuel generating capacity the equivalent of any wind plants on the system. As noted in the previous article the Australian Energy Market Operator, the grid operator for the Eastern states, cannot simply accept assurances by activists that wind turbines will always be operating somewhere. They have to study the matter carefully for themselves and then amass considerable operational expertise, and then decide how much to trust wind generators, if at all. There is some evidence, cited in the last article, that when the wind dies, it dies across all of South Eastern Australia. Certainly the AEMO will have to plan for the worst case scenario, a hot day with no wind, and keep a generating reserve on top of that.

In other words, for the foreseeable future, wind farms will not replace a single bolt on a single fossil fuel station, and that means additional costs. There may be jobs in installing wind generators and photovoltaic arrays, imported from China, but both those jobs and the green devices have to be paid for by energy consumers. The higher energy costs resulting from those extra jobs and extra equipment will then result in job cuts elsewhere in the economy, or (more likely) the loss of jobs that would have been created but for green energy.

So what will be the eventual result for the Australian economy of this brave venture into green energy? As far as I know this question, like so many others in our venture into alternative energy projects, is almost entirely unstudied, as least by anyone with a claim to independence. There are studies by various groups on the economic effect of a carbon tax, but nothing – aside from green agitprop “reports” from the likes of Greenpeace – specifically on green power. But the issue has received intermittent attention overseas.

A report from Spain, ‘Study of the effects on employment of public aid to renewable energy sources’ by a Dr Gabriel Alvarez of King Juan Carlos University in Madrid came to the dramatic conclusion that for every job created in the wind sector 2.2 jobs were destroyed elsewhere in the economy. Further, each green job cost US$774,000. A closer reading of the report indicates that Dr Alvarez’s estimate includes jobs that would have been created had the money spent subsidising wind been used more wisely. To make those calculations he had to use various assumptions which were attacked bitterly by green groups, who immediately declared the report “discredited”. They also managed to show that Dr Alvarez was associated with a group that had, at some point, accepted money from an oil company. In the shadowed mind of wind activists, this was absolute proof of energy industry conspiracy. However, they did not try to deny one grim figure in the report, that the electricity networks in Spain pay the country’s many wind farms three times the going rate for wholesale electricity.

Another study by Luciano Lavecchia and Carlo Stagnaro of Italy’s Bruno Leoni Institute used a similar approach to work out that the money spent by the government to create jobs in the country’s fast growing wind sector, could have been used to create somewhere between five to seven jobs in other parts of the economy. This report was dismissed out of hand by activists, as Bruno Leoni is a conservative think tank. On the activists side there are any number of reports by this or that environmental group which routinely counts the number of jobs created in the wind sector, and ignores job losses elsewhere in the economy caused by higher electricity prices.

For that is the problem. In essence, the wholesale adoption of wind will push up energy prices for no return. Consumers and businesses will be, in effect, subsidising a new industry which adds nothing whatever to the energy sector. The only advantage is the theoretical savings in carbon which, in the absence of any binding, enforceable international agreement on limiting emissions, are pointless. The wind sector is then a straight economic dead weight, which will cost jobs elsewhere in the economy. At the minimum the ratio would be one job lost for every job gained in the green industry – otherwise the result would be a gain in jobs which seems very unlikely. Working out just how many jobs would be lost beyond that would require a full, independent enquiry, but it is also true to say that we may never notice. All the adoption of wind may mean, in the end, is a few percentage points shaved off growth rates in what has proved to be a strong economy in recent years.

As for the promise of hundreds of jobs in making and exporting wind generators and photovoltaic arrays, the obvious beneficiary of the western mania for green equipment is China with its advantages in manufacturing. As I understand it, the country has already become a major exporter of solar gear. If any advanced economy was going to win share in this international manufacturing industry then it be Denmark, Germany or Spain, which are much further along the alternative energy path than Australia.

In any case, why would we want to manufacture wind generators and PV arrays, as opposed to any other sort of good? If any Australian company feels they can beat the already well-established Chinese companies in this area then they are, of course, welcome to try. But they should not look for subsidies. Australia already has plenty of experience in subsidising manufacturing industries, and none of it is good. If policy makers really insist on going down this path then it would be best from all points of view to let China make these green industry devices.

As this series of articles has shown, wind energy and all the alternative energy projects are largely a waste of time. They are very expensive, they do not save carbon at anything like the levels claimed by wind advocates, and will cost jobs. As a further disincentive, in the absence of a binding, enforceable, international agreement on carbon there is simply no point to any savings in carbon that wind and alternative energy systems may achieve on the Australian electricity network.

If all the wind turbines in Australia were scrapped and wind enthusiasts forced to find new causes, and jobs, elsewhere, the country, and probably the environment, would be much better off.

Mark Lawson is a senior journalist at the Australian Financial Review, who has recently launched a book, A Guide to Climate Change Lunacy – bad forecasting, terrible solutions (Connor Court).